Forex Investment and Currency Trading

Spot

• Non-convertible. Need a document asset transaction to be able to trade spot. Managed float vs undisclosed basket by CB, band width of +/- 0.5%, to last closing.

NDFS

• NDFs typically trade up to one year, but longer NDFs possible up to five years, reasonably liquid and tenors stretch out to 10 years but infrequently traded. Standard size is up to USD 10 million.
• Fixing time – 9:15 am – 9:30 am local time (Beijing), two days prior to maturity/value date.
• Publication Site – Reuters SAEC. Bloomberg NDFF.
• Publication Time – Fixing two days prior to maturity/value date.
• Additional Comments – Fixing by PBOC with participation from 10 onshore banks.

Options

• Non-deliverable Options (NDOs)
• Quoted up to two years on NDFs, standard size is USD 10 million but illiquid. Settlement: two-day USD settled. At expiry, cash settled options are automatically the money, fixing by CB on Reuters page SAEC.
• Cut Convention – NDO cash settles to NDF fixing.

Repo

• External Debt – USD denominated: quoted up to one year, but one and two week and one month are most common periods for financing.
• Settlement day is T+2. settlement system – Euroclear.

General Remarks

• Best Dealing Hours – 9:30 am to 5:00 pm Beijing time
• Liquidity (estimated daily turnover) – USD 500-700 million NDF / USD 1 billion onshore spot.